Tuesday, 5 April 2016

PANAMA PAPERS - LEAK FROM TAX-HAVENS

Are you featured? Is your property registered offshore? (as is the UK tax offices portfolio).
Find old (rich) friends - and make new ones, in exotic locations.

If you happen across my lost offshore bank account holding $100 million - just forward the cash to me ...and I'll pay the tax and pay you a commission.

My first search took me to 3 unexpected routes to tax-havens - the financial district of Ekaterinburg, Russia, stuffed full of the Big 4 and many lesser tax-planners - Istanbul financial district - Consulco International Ltd, focused on Cyprus and Russian tax evaders, a firm similar to Mossack Fonseca - and Ras Al Khaimah in the UAE.

It's a great circle of international tax-free friends we should all join.

The only people who won't use this facility are in Her Majesty's Revenue & Customs HMRC, whose motto is "See no Evil - Forgive the Rich - Crucify the Poor".

****************

To; Rt Hon Andrew Smith MP, Oxford East, UK

15 April 2016.

Dear Andrew

Tax-Evasion.

Thank you for your continuing
activity on this issue and for the copy letter from tax minister, David Gauke.

After many years discussion with
experts, I now think that the UK government has a policy to not pursue wealthy
persons – individuals and companies – who evade taxes. The tax-law system seems
to be riddled with ex-tax-fraud-planners from big law and audit practices,
embedded in key government roles. Sadly, I am forming the view that the UK tax
system is deeply corrupt.

One of my greatest concerns is the
government’s determination to sell the well run and profitable (£1M per annum)
Land Registry to any buyer, including private offshore funds:

“UK is again offering to sell the
state-owned Land Registry - to Advent International in Luxembourg (Private
Eye). This will hide all the owners and dealings of UK properties and enable
crooks to claim public common land behind a wall of even greater secrecy than
today; or simply to steal our houses by re-registration. How can an ordinary
(homeless) person sue a secretive international offshore Hedge Fund?

Perhaps David Gauke will comment
on selling Land Registry to crooks; and on the pathetic 11 cases brought by
HMRC against tax-haven evaders, out of more than 200,000 tax-haven,
revealed and identified accounts. The villains have taken over and are asset-stripping
austerity-Britain.

files of secret tax-haven companies, leaked from global lawyers Mossack Fonseca, has caused a storm around the world. The leak amounts to 2 Terabytes of data - more than all previous controversial leaks added together. (Watch the video)

The team of journalists in Germany and other countries, have been working for nearly a year to convert the raw data into legible format and interrogate it for famous names. It is these famous names that the media has chosen to publish first; so we learn that President Putin has a musical friend, a cellist, who has suddenly and inexplicably been showered with hundreds of millions of dollars. Is it Putin's cash? And we learn that British PM, David Cameron's father ran a substantial offshore investment fund for 30 years, which has never paid a penny tax to Britain - which is not very politically correct, at a time when all Britons are mired and miserable deep in austerity - and told that the nation is bust. Dozens of trusted leaders have hidden millions and billions of their fellow citizens' money in the tax-havens. We are all deeply shocked, distressed and terribly excited.

This cornucopia of wealth, obviously not needed by the "beneficial owners" (as opposed to the false owners hired to shield the loot from prying eyes), has been languishing in the world's 74 known and some unknown tax-havens and steadily increasing, since Thatcher and Reagan bestrode the globe - and gave license to all the mediocre parasites on earth to steal as much as they could and become gloriously "filthy rich"; without paying a penny of tax back to the source countries - where the wealth was generated. We - The People - are rightly curious to know how they've shipped the money offshore, past zealous keen eyed auditors and alert bankers - and how we are going to get it all back.

Russia has leapt to Putin's defense, saying there is nothing new in these scurrilous rumors and anyway he didn't do it. Britain has leapt to Cameron's defense, saying that his family finances are "A private matter" that we impertinent tax-paying peasants have no right to question. And anyway, his father died some years ago. The BBC repeat on the hour every hour, tales of tortured mistreated hunted heroic migrants who HAVE to hide their identities and last few pitiful belongings from wicked dictators and secret police - in, of course, well hidden and protected tax-haven companies in well heeled tropical paradises; whose transactions are, of course, "all completely legal" ...and nothing whatsoever to do with tax evasion, avoidance or minimization. Or about cheating the rest of the poor saps at home who do pay tax.

This unravelling and analyses of 40 years of villains burying loot on remote treasure islands - will run and run. Watch this page.
*************

TAX-PLANNERS ALSO GO TO PRISON - Which bunk do you prefer Sir? Upper or lower?:

To John:

Yes - Private Eye has been pointing the finger at the
Guardian Group for years. It is breathtaking hypocrisy. But real offshore
tax-evasion is still a minority crime – for the bravest and boldest. The Panama
Papers is the 3rd huge leak of names and accounts. Tax investigators
will act, I think; even HMRC.

Blairmore Investment Trust (Dave’s dad) would only be
illicit if management was in London – not overseas. They seem to have gone to
great lengths to make that argument. In a tax court, under cross-examination -
I guess the false Trustees/ Directors /Managers would be quickly unmasked
as fakes. But that is unlikely to happen.

This was my special area - back in the days of McVeigh
Hodson Blackstone Franks. I still do a few cases. I was asked last week for an
article on what happens to rogue tax-planning lawyers and accountants:

Noel

**************

9 April 2016. Taxing Times For
Lawyers.

Here is my first draft. I haven’t
investigated the Professional Indemnity Insurance issue as (1) very little is
published about claims (2) claims can and do take years (3) each insurance
policy will differ (4) I’ve already written 1,800 words.

Please say if this is the type of
article you want, Do edit it. And do share it.

The Panama Papers, 11.4 million pages, copied from about
200,000 client files of international company formation lawyers Mossack Fonseca
, detailing their clients’ offshore companies real beneficial owners, are
being published globally. The data was purchased by German
newspaper Suddeutsche
Zeitung for $1.4
million (Bloomberg) . Among the previously anonymous clients are many well
known figures from politics, business, sport and entertainment. The
global media (April 2016) are making it front page, headline news.
The UK Guardian
newspaper is helping to analyse and is publishing the data.

The data, from 1977 to 2015, amounts to 2.6 terabytes, or
2.6 trillion bytes of digital information (2.6 followed by 11 zeros),
which is equivalent to ten new 250GB laptops, completely full. It is an
enormous amount of confidential data – far bigger than all previous leaks added
together.

The clients will be both alarmed and annoyed. Their
homeland tax-collectors will check the clients’ tax returns against this
information. Many are companies formed in Panama, where Mossack Fonseca are based, and registered in
tax havens, including The British Virgin Isles, Cayman, Bermuda, Channel Isles,
London and many more of the 82
tax-havens.

The International Consortium
of Investigative Journalists, ICIJ, calculate that Mossack Fonseca have
formed about a quarter of the world’s tax-haven companies and Trusts. as “tax
vehicles”; implying 920,000 globally. This is a low estimate of companies
formed since 1977, but many have not traded, set-up for transactions which
didn’t happen. One million is a fair guesstimate – between 82 tax-havens,
implies only 12,000 active companies each.

The assets held in tax-vehicles was estimated, in 2012, by
Wall Street, McKinsey economist James
Henry as $32 trillion, (80 million jobs for 10 years). A 2007 OECD
report said $21 trillion. Most of these assets, mostly cash, have been
transferred tax-free from major OECD and emerging economies, via international
banks. Assets from OECD based companies are transferred by self-invoicing
(not arms-length as required by law). Creating self-invoices is usually
false-accounting – a criminal offence.

The total Capital-Flight grows by $1 trillion per
annum, which is 1/60th or 1.6% of the annual global gross domestic
product GGDP. Some 98.4% of GGDP, of our world-work-value, remains in the
source nations – the $1 trillion cash is the liquidity from GGDP; which
explains austerity and quantitative easing to top up liquidity in wealthy
regions. ( see Money
Wars Slide 11).

Thus tax-evasion is damaging , and of interest to
governments, but is a minority activity. Most executives, businesses, lawyers
and accountants are not involved in this global crime. Beware of those who are
– and Sup with a Long Spoon. Clients might not tell you the truth.

Many top tax-planners have become so habituated since 1980
to their dark arts that they have lost sight of the criminality. Naive auditors
and tax-compliance clerks observe high-flying senior partners advising on the
creation of self-invoicing and assume “it is all perfectly legal”. It is not.
In McVeigh
Hodson Blackstone Franks tax dept (1970-80), the questions we asked were
“…has anyone been advised to hide their identity?” and “…does this mean two
sets of company books?” Most tax-haven companies fail these tests;
indicating criminal False Accounting, Fraud, Fraudulent Conspiracy, and Wire
Fraud, which carry long prison sentences.

THE TAXMAN COMETH – AVOIDING PRISON - A
barrister interviewing a confident offshore, but London resident, client and
his clever accountant, cautioned them with “You won’t feel so bullish when you
are clutching the bar at the Old Bailey” adding “…which prison bunk do you
prefer Sir – upper or lower?”

Advisors should focus on the homeland or source nations’
laws – the tax-haven’s national laws are irrelevant. It is not the
tax-havens that are losing capital and tax revenues. The majority of experts
who insist that “it is of course completely legal” often recite the laws of
Jersey or Liechtenstein or Andorra or Malta or Delaware or Luxembourg etc. It
is the laws of your client’s country of residence which apply – that is where
the assets and profits are generated and is the region which imposes penalties.

The
UK tax-collectors HMRC are usually satisfied to collect the tax, compound
interest and penalties (usually being 100% of the hidden assets); the UK only
takes criminal proceedings where the client is a persistent,
repeat tax-evader. HMRC hardly ever act against advisors – even those who
have written false invoices. Famous cases include champion jockey Lester
Piggot, comedian Ken Dodd, Disc Jockey Chris Moyles and 450 others, but in the
past decade HMRC have only brought 11 (eleven) cases against more than 100,000
UK sourced tax-haven companies, citing lack of resources. This has given
planners a false-sense of immunity; but HMRC can re-open assessments for past
years – and issue protective assessments (in essence saying “you prove it is
tax-paid”).

The IRS in America is far less polite and more immediate.
There is a current case (Apr 2016) against a retired tax-court judge - Kroupa. The
IRS publish lists
of cases, presumably to discourage others.

I SAY AVOIDANCE - YOU SAY EVASIONIn this US case, a firm of Chicago
lawyers, Jenkens & Gilchrist, advised 931 clients on a tax-avoidance scheme
that the court found to be tax-evasion and criminal. On a conspiracy charge the
lawyers got up to 8 years prison and $190 million in fines. Presumably the
clients all faced back-duty tax cases which usually take 100% of the
“sheltered” money.

DAVID
MILLS - ITALYThe Italian courts take decades to process a tax cases and rarely
recover any assets. The defendants might die of old age before judgement is
made. But, exceptionally in the Berlusconi and Parmalat
case the Italians arrested UK lawyer David Mills who was charged with money-laundering and tax fraud and
sentenced to jail. He later successfully appealed and remarried his wife, UK
Minister Tessa Jowell. But few lawyers are that well connected. In the process
Mills confessed to HMRC of evading tax on $600,000 paid by Berlusconi via a web
of tax-haven companies. Presumably even HMRC have now taxed the $600K – or have
they?

Grant Thornton, UK, the
auditors of
Parmalat, the alleged source of the laundered money, were sacked and sued
by Parmalat investors. The case re-surfaced in June 2014 in the US, again
putting the auditors at risk of jail and very
large fines.

SPAIN – ROYAL DUESPrincess Cristina of Spain
has not been charged with embezzlement, but her husband has. The Princess
(Infanta) is charged with tax-evasion on her income from the embezzled
funds. She faces an 8 year sentence. The case is proceeding (April 2016).

USA - ENRON and Arthur
Andersen
(now Accenture) - The largest corporate collapse to date. The auditors were
banned. This case had all the “complex” signals of tax-evasion. At the time,
October 2001, Arthur Andersen was the world’s largest auditor and tax-planner.

It is probable that they contrived then
audited the maze of on-shore and offshore “vehicles” for tax-evasion purposes,
which were also used by the internal accountants and directors to steal
$40 to $60 billon dollars.

“All told, sixteen people pleaded guilty for crimes committed at
the company, and five others, including four formerMerrill
Lynchemployees,
were found guilty. Eight former Enron executives testified—the main witness
being Fastow—against Lay and Skilling, his former bosses.[127]Another was Kenneth Rice, the former chief
of Enron Corp.'s high-speed Internet unit, who cooperated and whose testimony
helped convict Skilling and Lay. In June 2007, he received a 27-month sentence.[145]

Michael W. Krautz, a former Enron accountant, was among the
accused who was acquitted[146]of
charges related to the scandal. Represented by Barry Pollack,[147]Krautz was acquitted of federal
criminal fraud charges after a month-long jury trial.”

Exactly one year after Enron began its free
fall into bankruptcy, auditor Arthur Andersen LLP received today the maximum
sentence of five years probation and a $500,000 fine for altering evidence of
its work with the disgraced energy giant.

U.S.
District Judge Melinda
Harmon sided with prosecutors and the Securities and Exchange
Commission, who wanted her to make an example of the firm.

Germany
– Tax Evasion – “ Attorneys or C.P.A.s may be accused by the C.I.D. (“Steuerfahndung”) of having colluded with
the accused taxpayer thereby disqualifying them from further defending their
clients“
USA based advice. This implies that advisors will be criminalised alongside
clients.

Mr
Becker had admitted making a mistake and has paid 3m euros in back taxes
and interest. "Putting Becker in jail would be senseless and
unfathomable," his defence lawyer Klaus Volk had argued. But the
prosecution said Mr Becker had waited too long to make his confession.

A German court convicted Bayern
Munich president Uli Hoeness of tax evasion on Thursday and sentenced the
man who turned the football club into one of the world's most successful sports
dynasties to 3.5 years in jail.

Some 55,000 tax evaders have turned themselves in over the last
four years and paid a total of about 3.5 billion euros in back taxes, according
to the taxpayers association. The number of voluntary disclosures rose
four-fold in 2013 from 2012.

Aug
2011 German tax dodgers with money hidden in Swiss
banks can sleep easy tonight. For the German government this week initialled a
beggar-thy-neighbour deal that undermines years of diplomatic work to penetrate
Switzerland's globally corrosive banking secrecy. The agreement, which is due
to be signed by both governments over the next few weeks, sees Germany
accepting a paltry $2.8bn upfront from theSwiss banks said to hold
some $276bn of Germans' undeclared wealth.

NO HIDING PLACE - The Panama Papers, of
200,000+ clients, leading to many well known tax-havens where many famous and
infamous people and companies are hiding tax-free assets, will oblige even the
most reluctant governments to act and introduce tax-justice. Few OECD regions,
apart from the USA, jail accountants, lawyers, bankers and tax-planners
alongside clients who they have advised, enabled and assisted to evade tax.
But, this latest, largest “leak” which again indicates and confirms the vast
amount of global hidden and frozen assets, when many OECD governments are
imposing austerity, pleading poverty and borrowing heavily from The
International Free Markets, will, I think, at last tip the political balance
and trigger tens of thousands of tax investigations, under existing laws,
reaching back to assets hidden since 1977 and coming forward to 2016.

I consider it highly likely that the spy
agencies of OECD countries have already obtained all past and present data from
all tax-haven accounts and transactions.

For repatriation purposes, as in America, and
Italy, other regions will probably also arrest the most persistent tax-evasion
advisors.

GUILTY UNTIL PROVEN INNOCENT - The most
efficient way to proceed, as happened with the Cyprus
tax-bank accounts in 2013, is for governments to confiscate the tax-haven
assets of their resident citizens (USA taxes its citizens wherever they reside)
and oblige beneficial owners to demonstrate the offshore assets are tax-paid.
Nations that are slow to act will find some or all of the tax-haven assets
which ought to be repatriated to their country, taken by faster acting and more
determined legislations.

Noel Hodson, Tax Reconciliations, Oxford. 7
Apr 2016.

**************

THE UK MEDIA REPORT THAT ONLY RUSSIA & CHINA USE TAX HAVENS. WHAT BULLSHIT.5 Apr 2016.

Lee,

THE UK MEDIA COVER-UP OF THE PANAMA PAPERS.

Well said (below). Spot on. But I think the ICIJ are a genuine
force for good.

As you say, China and Russia are bit players in offshore
skulduggery. Most of our VIPs have illicit offshore accounts, “Which,” as the
BBC parrots 20 times a day, “is of course all completely legal” unless
you live in the UK/USA/OECD and pretend the offshore assets are controlled by
offshore false-directors /trustees who generate false invoices
(self-invoicing) to reduce your UK income – in which case you are guilty of
fraudulent conspiracy /wire fraud – which jailed Al Capone and others for a
long time. Where is the UK's bold champion of the people, Jeremy Corbyn, when you
need him?

As an aging tax-advisor, I wrote to a few surviving lawyer
colleagues:

“4 April 2016 - The International
Consortium of Investigative Journalists ICIJ spilt the beans. Who copied all
Mossack Fonseca’s 230,000 client files is a mystery. They will name someone, a
hapless soul in Panama, but my guess is that all such data is being mined by
GCHQ, MI5 CIA Homeland Security etc – who might be spying on their computers –
to get the grounds to recover about $16 trillion for the US Treasury (and $3T
for us). That’s a lorra lorra loot – even for America. $16,000,000,000,000 (12
noughts) – it would pay off all their government deficits.

My estimate of how much of the $32T is from the UK
economy is $3 trillion (about 8 million jobs for 10 years). From accountancy
and auditing experience I guess that 99% of it has been transferred from OECD
economies using (illicit) self-invoicing, however "complex" and
tortuous the route. The devil is as ever in the detail and it is in these
transactions, claiming tax-deductibility in the source nations, that fraudulent
conspiracy has occurred (in America also "wire fraud"). The offshore
total is calculated by OECD Paris to be growing by $1 trillion a year - which
is approx the entire annual surplus liquidity from all mankind's work - the
global GDP. http://www.noelhodson.com/Money-Wars-2012-V5SHORT.pdf

I have long thought that the hidden amounts are so large
and are mostly criminal acts that major governments would set out to recover
the assets.

People at most risk of jail are officers and advisors who
have signed Balance Sheets and Tax Return Declarations in the OECD nations, or
who have paid dummy officers to sign for them ("a director by whatever
name called"), and the corporate treasurers who have authorised or
personally effected the transborder transfers of assets - without full
disclosure.

The Mossack Fonseca stolen or leaked records date from
1977. From which date the Beneficial Owners' income on the assets will not have
been declared. Far too late now to put up a credible "I didn't know"
or "the dog ate my homework, Patent Box and tax-returns" defence. It
is said that the 11.3M pages are 2/3rds of Mossack's records - so there is more
(3.5M papers) to come - and the ICIJ say that Mossack is the 4th largest of
such offshore enablers - so the other 3 big-firms amount to another 45M
documents - across all 72 tax-havens.

Advising "how to move back on-shore" with a
clean bill of health, I caution clients to assume that the ICIJ and other
investigators (and thus local tax-collectors) also hold leaked records from the
Big-4 accountants (e.g. PWC LuxLeaks) - and from banks (e.g. HSBC Zurich etc).
The past 10 years' leaks attest to this supposition. Early tax settlement is
vital to minimise costs.

A crumb of comfort for clients who paid for "the
best of" advice "which is of course all completely legal"
(bullshit), in writing, from the Big4 or major law firms, is that the clients
might be successful in suing the advisors for faulty tax-panning; in turn the tax-planners
will recover the costs from Lloyds of London under their PI policies.
Self-invoicing has never been legal in OECD tax-law, however cunningly
disguised.

Whoever leaked the Mossack Fonseca papers appears motivated by a
genuine desire to expose the system that enables the ultra wealthy to hide
their massive stashes, often corruptly obtained and all involved in tax
avoidance. These Panamanian lawyers hide the wealth of a significant proportion
of the 1%, and the massive leak of their documents ought to be a wonderful
thing.

Unfortunately the leaker has made the dreadful mistake of turning to
the western corporate media to publicise the results. In consequence thefirst majorstory, published today by the
Guardian, is all about Vladimir Putin and a cellist on the fiddle. As it
happens I believe the story and have no doubt Putin is bent.

But why focus on Russia? Russian wealth is only a tiny minority of the
money hidden away with the aid of Mossack Fonseca. In fact, it soon becomes
obvious that the selective reporting is going to stink.

The Suddeutsche Zeitung, which received the leak, gives adetailed explanationof the methodology the corporate
media used to search the files. The main search they have done is for names
associated with breaking UN sanctions regimes. The Guardianreports this tooand helpfully lists those
countries as Zimbabwe, North Korea, Russia and Syria. The filtering of this
Mossack Fonseca information by the corporate media follows a direct western
governmental agenda. There is no mentionat
allof use of Mossack
Fonseca by massive western corporations or western billionaires – the main
customers. And the Guardian is quick to reassure that “much of the leaked
material will remain private.”

What do you expect? The leak isbeing
managedby the
grandly but laughably named “International Consortium of Investigative
Journalists”, which is funded and organised entirely by the USA’s Center for
Public Integrity. Their funders include

Ford Foundation

Carnegie Endowment

Rockefeller Family Fund

W K Kellogg Foundation

Open Society Foundation (Soros)

among many others. Do not expect a genuine expose of western
capitalism. The dirty secrets of western corporations will remain unpublished.

Expect hits at Russia, Iran and Syria and some tiny “balancing” western
country like Iceland. A superannuated UK peer or two will be sacrificed –
someone already with dementia.

The corporate media – the Guardian and BBC in the UK – have exclusive
access to the database which you and I cannot see. They are protecting
themselves from even seeing western corporations’ sensitive information by only
looking at those documents which are brought up by specific searches such as UN
sanctions busters. Never forget the Guardian smashed its copies of the Snowden
files on the instruction of MI6.

What if they did Mossack Fonseca database searches on the owners of all
the corporate media and their companies, and all the editors and senior
corporate media journalists? What if they did Mossack Fonseca searches on all
the most senior people at the BBC? What if they did Mossack Fonseca searches on
every donor to the Center for Public Integrity and their companies?

What if they did Mossack Fonseca searches on every listed company in
the western stock exchanges, and on every western millionaire they could trace?

That would be much more interesting. I know Russia and China are
corrupt, you don’t have to tell me that. What if you look at things that we
might, here in the west, be able to rise up and do something about?